If the Reserve Ratio Is 20 Per Cent and a Bank

question 42

Multiple Choice

If the reserve ratio is 20 per cent and a bank receives a new deposit of $100, then this bank:

• A)must increase its required reserves by $20
• B)will initially see its total reserves increase by $100
• C)will be able to make a new loan of $80
• D)all of the above

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Definitions:

Trichromatic Theory

A theory of color vision that suggests our ability to perceive color is based on the response rates of three types of cones in the eye, each sensitive to different light wavelengths.

Color Vision

The capability of the visual system to distinguish objects based on the wavelengths of the light they reflect, emit, or transmit.

Cones

Photoreceptor cells in the retina of the eye responsible for color vision and functioning best under bright light conditions.

Response

A reaction or reply to a stimulus or a particular situation, ranging from physical responses in the body to complex emotional and cognitive reactions.